Zaid, 37, is a slick businessman with grandiose hopes for Libya's future. Cruising along Tripoli's palm-lined coastal road at sunset, house music blaring over his speakers, he is bullish about the oil-rich nation's potential.

"In the 1970s, Dubai was just a bunch of tents and we were booming," Zaid* says of the golden years in Libya following the discovery of oil and before the revolution of Colonel Muammar Gaddafi relegated the country to obscurity. Libya is going to boom again, just wait and see."

With international and most US sanctions now lifted, there is a heady sense of optimism among Libyans, excited about the country's rapprochement with the West after decades of isolation.

"I'm not here for the scenery. I'm here because there are lots of opportunities," says Fadhi, 32, a hospitality worker and one of many Libyans who have returned from living abroad to take advantage of the country's new post-sanctions business climate.

"They built Dubai in 10 years, from 1990 to 2000. Give us 15 years and we will be bigger than Dubai."

While United Nations sanctions against Libya were suspended in 1999 following Libya's handover of two suspects implicated in the 1988 Lockerbie bombing for trial in The Hague, they were officially lifted in August last year, when Colonel Gaddafi agreed to compensate families of the victims. His recent abandonment of his weapons of mass destruction program paved the way for reconciliation with the US.

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While the shift constitutes a radical departure in foreign policy for a once fiercely anti-Western revolutionary, few Libyans are complaining. "The sanctions were really bad," says Najwa, 30, a Western-educated Libyan woman working for a foreign oil company. "There was no medicine. It was also really expensive to buy imported food from supermarkets."

Libyans were also unable to criticise his regime. "What could we say? Criticising the regime is the most stupid thing you can do," says Omar, 35, a Libyan businessman, referring to the regime's security apparatus.

Things have eased, but a modicum of Gaddafi worship is still compulsory. "If you open a clinic or a shop, and they see you don't have a picture of Colonel Gaddafi on the wall, you're screwed."

Colonel Gaddafi overthrew the monarchy of King Idris in a military coup in 1969 in what was then a storm of pan-Arab, nationalist fervour.

Colonel Gaddafi attempted to equalise Libyan society by disenfranchising the private sector and old elite linked to the monarchy. While the upper classes lost property and land under populist state policies, the lower and middle classes received cheap housing, education and subsidised staple foods.

But Libya's younger generation have not been so happy with the status quo, their frustrations fuelled by their exposure to satellite television.

At the dusty faculty of arts and sciences at Tripoli's Al-Fatah University, posters of Britney Spears and David Beckham plaster the walls of the cafeteria. Fadhi, 21, a computer engineering student wearing fake Diesel jeans, lists Ja Rule, 50 Cent and Eminem as his favourite American rappers.

The younger generation's interest in the West undoubtedly stems from the fact that there is literally nothing to do for young people in Libya. With alcohol banned by the state and no nightclubs to speak of - aside from parties on private farms and elaborate wedding parties - entertainment options are limited.

It was precisely this frustrated younger generation that pressured Colonel Gaddafi to make amends with the international community, says Professor Dirk Vandewalle, an expert on Libya at Dartmouth College in the US.

"These are people who wanted to travel, to do all the normal things that people in society do," he said, citing Colonel Gaddafi's Western-educated son Seif al-Islam as a key player in pushing for change.

Professor Vandewalle says Colonel Gaddafi, sensing the resentment building up towards the isolation, cleverly manipulated Libyan society by portraying the need for change as the will of the people, in keeping with the regime's socialist tenets. "In crucial speeches over the past two or three years he has kept saying, 'If the people want change then I am the guide of the revolution, and the Libyan people will determine their own policy'."

With Colonel Gaddafi's control over the country's oil wealth forming the cornerstone of his dictatorial power, economic necessity in turned played a role, as he desperately needed foreign investment to rejuvenate his ailing oil sector.

While his rapprochement with the West has come as a huge psychological relief to Libyans, the country clearly has many domestic problems that it has yet to tackle."If you think of Dubai, it has very conscientiously created a legal investment climate where there is transparency, accountability and openness. All of this is completely lacking in Libya," Professor Vandewalle said.

Young Libyans wanting to travel will still face difficulties getting visas. "They expect it all to change overnight, that the West will forget what has happened over the last 30 to 40 years, but that is simply not going to happen."